fincash logo SOLUTIONS
EXPLORE FUNDS
CALCULATORS
LOG IN
SIGN UP

Fincash » Mutual Funds » Ultra Short Term Mutual Funds

Ultra Short Term Bond Funds

Updated on April 2, 2020 , 3084 views

Ultra short term funds, earlier referred as Liquid Plus Funds, are funds that invest in debt instruments having residual maturities of more than 91 days and typically less than 1 year(in some cases they may go upto 1.5 years). Ultra Short Term Funds are short term investments that are highly suitable for investors who are willing to marginally increase the risk of investment to earn good returns. Essentially, Ultra short Funds invest in money market securities and other debt instruments of short maturities, however, the average portfolio maturity of these funds is generally little higher than that of Liquid Funds.

Ultra SHort Term Bond Fund

Also known as Cash or Treasury Management Funds, Ultra Short Term Funds generally offer good returns that other types of Debt fund (like Liquid Mutual Funds).

Ultra Short Term Bond Funds Features

Fund Type

Ultra-Short Term Funds are open-ended and the maturity period of funds varies from fund to fund. The maturity is very short(usually a couple of months) but longer than that of liquid funds. The investors can easily buy and sell the units of these funds as per the NAV (Net Asset Value) of the redemption day.

For Ultra Short Term Funds, the purchase happens on a (T+0) basis. This means that the NAV is fixed on the same day as the funds reach the AMC. For e.g. for an investor purchasing the fund within the cut-off time on a Tuesday (and funds being realised), the NAV date applicable would be Tuesday itself.

Exit Load of Ultra Short Term Bond Funds

Some Ultra Short Term Funds may have exit loads on exits made within very short periods of time (ranging from 7 days to 1 month). The period till which exit load applies may vary with funds. However, some ultra short terms funds do not have any exit loads also.

Returns of Ultra Short Term Funds

The returns may be paid to the investors in the form of Dividends (in the case of Dividend Funds) or in terms of appreciation of the fund NAV (in the case of Growth funds).

Redemption Ultra Short Term Funds

In the case of redemption, the process is the same for both liquid funds and Ultra Short Term Funds. For all redemption requests received by the AMC within the cut-off time (3 PM), the proceeds are paid to the customer the next day i.e. on a (T+1) basis. Albeit, if the request gets registered after 3 PM, the investors shall receive the redemption amount day after.

Minimum Amount of Investment

The minimum of Investing in Ultra Short Term Funds is INR 5,000 to 10,000 (on the retail plans).

Ready to Invest?
Talk to our investment specialist
Disclaimer:
By submitting this form I authorize Fincash.com to call/SMS/email me about its products and I accept the terms of Privacy Policy and Terms & Conditions.

Investment Avenues of Ultra Short Mutual Funds

Ultra Short Term Funds are fixed income investments that invest in money market instruments like Treasury Bills but these may be 91-Day, 182-Day or 360-Day Treasury Bills. They can also invest in CDs and CPs having residual maturities longer than 91 days. Moreover, it is sometimes understood that there is no credit risk in such portfolios. However, this is not the case. Any short term investment like Ultra Short Funds can give a negative return as well if there is a default. But, most companies delay payments on longer-dated Bonds before they start defaulting on short term debt (since this would lead a freeze in short term credit). Also, the investors need to carefully look at the portfolio in these funds to assess the quality of instruments and be ready to take that risk.

Why Invest in Best Ultra Short Term Funds?

Typically, the yield on a debt instrument is higher for instruments with longer maturities. Think of it as a way to reward the extra risk that investors take to be invested in the instruments for a longer period of time. In finance, this is called the liquidity premium Theory. Thus, securities in Ultra Short Mutual Funds usually earn a higher yield as compared to Liquid funds (albeit at a relatively higher risk). As a result, Ultra Short Term Funds may give marginally better returns than Liquid funds over comparable periods of time. So, make a sensible short-term investment in Mutual Funds by investing in Best Ultra Short term Mutual Funds to earn good returns with less volatility.

Taxation of Ultra Short Term Funds

In the below table, the returns of Ultra Short Bond Funds received in the form of a dividend are tax-free in the hands of investors.

However, a Dividend Distribution Tax (DDT) is deducted at the source by fund houses, which is 25% in case of Debt Funds like Ultra Short Term Funds.

Liquid Funds Liquid Funds Ultra Short Funds Ultra Short Funds
Class of Investors Individuals/HUF Corporate Individuals/HUF Corporate
Dividend Distribution Tax 27.038% 32.445% 13. 519% 32.445%
Short Term Capital Gains As per Income Tax Slab Rates As per Income Tax Slab Rates As per Income Tax Slab Rates As per Income Tax Slab Rates

(Please note, investors are advised to consult their Tax consultant before taking any decisions)

Best Performing Ultra Short Debt Funds to Invest FY 20 - 21

Below is the list of top funds have net assets over 100 Crore and managing assets for atleast 3 years.

FundNAVNet Assets (Cr)1 MO (%)3 MO (%)6 MO (%)1 YR (%)3 YR (%)5 YR (%)
Aditya Birla Sun Life Savings Fund Growth ₹397.746
↑ 0.22
₹16,4890.41.53.27.67.68.1
Franklin India Ultra Short Bond Fund - Super Institutional Plan Growth ₹27.5296
↑ 0.02
₹15,0400.8-2.10.24.67.38.2
Indiabulls Ultra Short Term Fund Growth ₹1,941.84
↑ 1.10
₹2560.81.73.26.97.17.7
Note: Returns up to 1 year are on absolute basis & more than 1 year are on CAGR basis. as on 3 Apr 20

1. Aditya Birla Sun Life Savings Fund

The primary objective of the schemes is to generate regular income through investments in debt and money market instruments. Income maybe generated through the receipt of coupon payments or the purchase and sale of securities in the underlying portfolio. The schemes will under normal market conditions, invest its net assets in fixed income securities, money market instruments, cash and cash equivalents.

Aditya Birla Sun Life Savings Fund is a Debt - Ultrashort Bond fund was launched on 16 Apr 03. It is a fund with Moderately Low risk and has given a CAGR/Annualized return of 7.8% since its launch.  Ranked 6 in Ultrashort Bond category.  Return for 2019 was 8.5% , 2018 was 7.6% and 2017 was 7.2% .

Below is the key information for Aditya Birla Sun Life Savings Fund

Aditya Birla Sun Life Savings Fund
Growth
Launch Date 16 Apr 03
NAV (03 Apr 20) ₹397.746 ↑ 0.22   (0.06 %)
Net Assets (Cr) ₹16,489 on 29 Feb 20
Category Debt - Ultrashort Bond
AMC Birla Sun Life Asset Management Co Ltd
Rating
Risk Moderately Low
Expense Ratio 0.35
Sharpe Ratio 9.54
Information Ratio 0
Alpha Ratio 0
Min Investment 1,000
Min SIP Investment 1,000
Exit Load NIL
Yield to Maturity 6.5%
Effective Maturity 6 Months 18 Days
Modified Duration 5 Months 19 Days

Growth of 10,000 investment over the years.

DateValue
31 Mar 15₹10,000
31 Mar 16₹10,884
31 Mar 17₹11,843
31 Mar 18₹12,700
31 Mar 19₹13,713
31 Mar 20₹14,774

Aditya Birla Sun Life Savings Fund SIP Returns

   
My Monthly Investment:
Investment Tenure:
Years
Expected Annual Returns:
%
Total investment amount is ₹180,000
expected amount after 3 Years is ₹206,148.
Net Profit of ₹26,148
Invest Now

Returns for Aditya Birla Sun Life Savings Fund

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 3 Apr 20

DurationReturns
1 Month 0.4%
3 Month 1.5%
6 Month 3.2%
1 Year 7.6%
3 Year 7.6%
5 Year 8.1%
10 Year
15 Year
Since launch 7.8%
Historical performance (Yearly) on absolute basis
YearReturns
2019 8.5%
2018 7.6%
2017 7.2%
2016 9.2%
2015 8.9%
2014 9.7%
2013 9.5%
2012 9.7%
2011 9.2%
2010 5.8%
Fund Manager information for Aditya Birla Sun Life Savings Fund
NameSinceTenure
Sunaina Cunha11 Oct 145.23 Yr.
Kaustubh Gupta15 Jul 118.47 Yr.

Data below for Aditya Birla Sun Life Savings Fund as on 29 Feb 20

Asset Allocation
Asset ClassValue
Cash42.08%
Debt57.92%
Debt Sector Allocation
SectorValue
Corporate56.49%
Cash Equivalent26.48%
Government16.79%
Securitized0.24%
Credit Quality
RatingValue
AA12.57%
AAA87.43%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
Power Finance Corporation Ltd.
Debentures | -
4%₹724 Cr7,200
↑ 2,550
National Bank For Agriculture And Rural Development
Commercial Paper | -
4%₹683 Cr14,000
↑ 14,000
Reliance Industries Limited
Debentures | -
3%₹542 Cr5,400
↑ 4,250
Reliance Jio Infocomm Limited
Commercial Paper | -
3%₹492 Cr10,000
↑ 10,000
Reliance Retail Limited
Commercial Paper | -
3%₹425 Cr8,500
6.25% Indusind Bank Limited (26/03/2020)
Net Current Assets | -
2%₹400 Cr
The Tata Power Company Limited
Commercial Paper | -
2%₹393 Cr8,000
Shriram Transport Finance Company Limited
Debentures | -
2%₹349 Cr3,500
↑ 3,500
IndusInd Bank Limited
Certificate of Deposit | -
2%₹330 Cr35,000
↑ 35,000
Rec Limited
Debentures | -
2%₹326 Cr3,250

2. Franklin India Ultra Short Bond Fund - Super Institutional Plan

To provide a combination of regular income and high liquidity by investing primarily in a mix of short term debt and money market instruments.

Franklin India Ultra Short Bond Fund - Super Institutional Plan is a Debt - Ultrashort Bond fund was launched on 18 Dec 07. It is a fund with Moderate risk and has given a CAGR/Annualized return of 8.6% since its launch.  Return for 2019 was 9.6% , 2018 was 8.7% and 2017 was 8.2% .

Below is the key information for Franklin India Ultra Short Bond Fund - Super Institutional Plan

Franklin India Ultra Short Bond Fund - Super Institutional Plan
Growth
Launch Date 18 Dec 07
NAV (03 Apr 20) ₹27.5296 ↑ 0.02   (0.09 %)
Net Assets (Cr) ₹15,040 on 29 Feb 20
Category Debt - Ultrashort Bond
AMC Franklin Templeton Asst Mgmt(IND)Pvt Ltd
Rating
Risk Moderate
Expense Ratio 0.42
Sharpe Ratio 0.39
Information Ratio 0
Alpha Ratio 0
Min Investment 10,000
Min SIP Investment 500
Exit Load NIL
Yield to Maturity 9.48%
Effective Maturity 6 Months 25 Days
Modified Duration 5 Months 23 Days

Growth of 10,000 investment over the years.

DateValue
31 Mar 15₹10,000
31 Mar 16₹10,963
31 Mar 17₹12,008
31 Mar 18₹12,972
31 Mar 19₹14,167
31 Mar 20₹14,834

Franklin India Ultra Short Bond Fund - Super Institutional Plan SIP Returns

   
My Monthly Investment:
Investment Tenure:
Years
Expected Annual Returns:
%
Total investment amount is ₹180,000
expected amount after 3 Years is ₹206,148.
Net Profit of ₹26,148
Invest Now

Returns for Franklin India Ultra Short Bond Fund - Super Institutional Plan

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 3 Apr 20

DurationReturns
1 Month 0.8%
3 Month -2.1%
6 Month 0.2%
1 Year 4.6%
3 Year 7.3%
5 Year 8.2%
10 Year
15 Year
Since launch 8.6%
Historical performance (Yearly) on absolute basis
YearReturns
2019 9.6%
2018 8.7%
2017 8.2%
2016 9.7%
2015 9.7%
2014 10%
2013 10%
2012 10.3%
2011 9.4%
2010 5.9%
Fund Manager information for Franklin India Ultra Short Bond Fund - Super Institutional Plan
NameSinceTenure
Santosh Kamath25 Oct 181.18 Yr.
Pallab Roy1 Jun 0811.59 Yr.

Data below for Franklin India Ultra Short Bond Fund - Super Institutional Plan as on 29 Feb 20

Asset Allocation
Asset ClassValue
Cash23.54%
Debt76.46%
Debt Sector Allocation
SectorValue
Corporate76.8%
Cash Equivalent22.2%
Government1%
Credit Quality
RatingValue
A17.74%
AA69.2%
AAA13.06%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
Vedanta Limited
Debentures | -
5%₹795 Cr7,900
Call, Cash & Other Assets
Net Current Assets | -
4%₹638 Cr
Bharti Airtel Limited
Debentures | -
4%₹553 Cr5,500
JM FINANCIAL CREDIT SOLUTIONS LIMITED
Debentures | -
4%₹540 Cr5,400
Indostar Capital Finance Limited
Debentures | -
3%₹439 Cr4,400
Bharti Airtel Limited
Debentures | -
3%₹400 Cr4,000
INDOSTAR CAPITAL FINANCE LIMITED
Debentures | -
3%₹390 Cr3,900
NIRCHEM Cement Limited
Debentures | -
3%₹378 Cr3,750
EDELWEISS COMMODITIES SERVICES LIMITED
Debentures | -
2%₹371 Cr7,500
EDELWEISS COMMODITIES SERVICES LIMITED
Debentures | -
2%₹361 Cr3,650

3. Indiabulls Ultra Short Term Fund

To provide liquidity with returns commensurate with low risk through a portfolio of money market and debt securities. However, there can be no assurance that the investment objective of the scheme will be achieved.

Indiabulls Ultra Short Term Fund is a Debt - Ultrashort Bond fund was launched on 6 Jan 12. It is a fund with Moderately Low risk and has given a CAGR/Annualized return of 8.4% since its launch.  Ranked 17 in Ultrashort Bond category.  Return for 2019 was 7.6% , 2018 was 7.1% and 2017 was 6.9% .

Below is the key information for Indiabulls Ultra Short Term Fund

Indiabulls Ultra Short Term Fund
Growth
Launch Date 6 Jan 12
NAV (03 Apr 20) ₹1,941.84 ↑ 1.10   (0.06 %)
Net Assets (Cr) ₹256 on 29 Feb 20
Category Debt - Ultrashort Bond
AMC Indiabulls Asset Management Company Ltd.
Rating
Risk Moderately Low
Expense Ratio 0.7
Sharpe Ratio 7.42
Information Ratio 0
Alpha Ratio 0
Min Investment 500
Min SIP Investment 500
Exit Load NIL
Yield to Maturity 0%
Effective Maturity
Modified Duration

Growth of 10,000 investment over the years.

DateValue
31 Mar 15₹10,000
31 Mar 16₹10,862
31 Mar 17₹11,782
31 Mar 18₹12,595
31 Mar 19₹13,540
31 Mar 20₹14,495

Indiabulls Ultra Short Term Fund SIP Returns

   
My Monthly Investment:
Investment Tenure:
Years
Expected Annual Returns:
%
Total investment amount is ₹180,000
expected amount after 3 Years is ₹203,125.
Net Profit of ₹23,125
Invest Now

Returns for Indiabulls Ultra Short Term Fund

Returns up to 1 year are on absolute basis & more than 1 year are on CAGR (Compound Annual Growth Rate) basis. as on 3 Apr 20

DurationReturns
1 Month 0.8%
3 Month 1.7%
6 Month 3.2%
1 Year 6.9%
3 Year 7.1%
5 Year 7.7%
10 Year
15 Year
Since launch 8.4%
Historical performance (Yearly) on absolute basis
YearReturns
2019 7.6%
2018 7.1%
2017 6.9%
2016 8.8%
2015 8.8%
2014 9.3%
2013 8.8%
2012
2011
2010
Fund Manager information for Indiabulls Ultra Short Term Fund
NameSinceTenure
Vikrant Mehta20 Jun 190.53 Yr.
Malay Shah22 Aug 145.36 Yr.
Sourabh Sharma17 Jan 190.95 Yr.

Data below for Indiabulls Ultra Short Term Fund as on 29 Feb 20

Asset Allocation
Asset ClassValue
Cash92.42%
Debt7.58%
Debt Sector Allocation
SectorValue
Corporate59.46%
Cash Equivalent35.99%
Government4.55%
Credit Quality
RatingValue
AAA100%
Top Securities Holdings / Portfolio
NameHoldingValueQuantity
ICICI Bank Limited
Certificate of Deposit | -
10%₹25 Cr2,500,000
↑ 2,500,000
BIRLA GROUP HOLDINGS PRIVATE LIMITED
Commercial Paper | -
10%₹25 Cr2,500,000
↑ 2,500,000
IndusInd Bank Limited
Certificate of Deposit | -
10%₹25 Cr2,500,000
Small Industries Development Bank Of India
Commercial Paper | -
10%₹24 Cr2,500,000
HOUSING DEVELOPMENT FINANCE CORPORATION LIMITED
Commercial Paper | -
8%₹21 Cr2,100,000
Andhra Bank
Certificate of Deposit | -
7%₹18 Cr1,850,000
Export-Import Bank Of India
Commercial Paper | -
7%₹18 Cr1,850,000
Axis Bank Limited
Certificate of Deposit | -
7%₹18 Cr1,850,000
Aditya Birla Finance Limited
Commercial Paper | -
6%₹15 Cr1,500,000
↑ 1,500,000
48 DCMB 23032020
Sovereign Bonds | -
5%₹14 Cr1,400,000
↑ 1,400,000

invest smart, Invest Better!

Disclaimer:
All efforts have been made to ensure the information provided here is accurate. However, no guarantees are made regarding correctness of data. Please verify with scheme information document before making any investment.
How helpful was this page ?
Rated 4.8, based on 6 reviews.
POST A COMMENT